WTF Happened In 1971?

The economy changed today because of what happened in 1971

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WTF Happened in 1971?

The course of economic history changed in 1971

HOW MUCH A PERSON MADE IN 1971:

In 1971, the average person was bringing home $10,622 a year or about $885 a month.

HOW MUCH A HOUSE COST:

Anew house cost an average of $25,200 - the most important to keep in mind is context because that was roughly 2.5x the yearly income. Nowadays the median income is $44,225 and the median home value is $428,000 which is almost 10x the annual income today. In the 70s it took roughly 2.4 years for people to save enough money to buy a house - nowadays though it takes the average salaried person over 7 years to do the same. That’s because people’s incomes have not grown at the same pace that home values have.

HOW MUCH A NEW CAR COST:

If you wanted to buy a new car in the 1970s you could actually save some money and do that because they cost $3,560 - brand new. It cost about a third of what the average person was making at the time. Today of course the average price of a new car is $47,000 - obviously more than what the average person makes in a year.

HOW MUCH RENT WAS:

If you wanted to rent a place - the average rent in the 70s was $150 a month or about 1/6th of the monthly income at the time. If you wanted to rent the average 1 bedroom today - it would cost you $1,750 a month, or $2,065 for a 2 bedroom. That’s roughly half of the average monthly income - not one sixth like it used to be.

HOW MUCH COLLEGE COST:

if you wanted to get a college education in the 70s, when it actually mattered to say you have a college degree to employers - you could go to a prestigious Ivy League school like Harvard and tuition would run you $2,600 a year. In comparison to today’s $54,000 a year.

WTF HAPPENED?

It’s called the Nixon Shock when Richard Nixon ended something called The Bretton Woods Agreement. At the time, the United States owned 2/3rds of the world’s gold reserve and that put it in a powerful position to do something kind of interesting and put itself at the top of the world order.

PHASE 1: Executive Order 6102

Signed on April 5, 1933, - this made it illegal for people to own “a lot of” gold in the United States.

PHASE 2: Bretton Woods Agreement

Signed in 1944 between the countries of the world. In this agreement, each country was to exchange their own native gold backed currency, in place of the the US dollar which could also be redeemed for gold. We made the dollar be the standard unit of exchange for all International business. This made the US extremely powerful.

WHAT'S THE PROBLEM?

The central banks promised to keep the dollar equal to 1/35th of an ounce of gold. The system was fine for a little while until eventually, there was a realization that the central banks could print more of these pieces of paper than the actual GOLD that they promised to keep in their vaults. This created inflation which was the beginning of what happened in 1971 onwards.

WHY DON'T WE GO BACK TO THE GOLD STANDARD OR BITCOIN?

Watch the video to find out the truth!

SOURCES:

*None of this is meant to be construed as investment advice, it's for entertainment purposes only. Links above include affiliate commission or referrals. I'm part of an affiliate network and I receive compensation from partnering websites. The video is accurate as of the posting date but may not be accurate in the future.